More On Shell Decision-A Follow Up Story

Business Economics & Services Team (BEST)

     A follow Up Story                                                       
                                         More On Shell Decision


It is being reported that the Union Government has sought the opinion of the Attorney General,the highest law officer of  the country  to look into the recently come out  delivered Bombay High Court decision on Shell company regarding applicability of  transfer   pricing  rules to its transaction of shares to its group company abroad. As per the report, te government's future course of action of filing an Special Leave Petition  (SLP) in the Supreme Court will be heavily dependent on the opinion of the Attorney General.

Insiders say that there will  be little chance of the Government going against the decision since there is an attempt on the part of the government to project a positive image about the investment climate in India. There is a widely held perception that India is heavily litigated country, thus creating a lot of delays in the project implementation once the project is caught up in litigation.
The other view is that the government has already set up an empowered committee, as  proposed  in the Budget 2014-15 to look into the transfer pricing issues in general and applicability of the retrospective tax triggered by the ongoing debate on Vodofone case. The government has already clarified that in future it will deist from introducing such taxes.
There are also reports that reconsideration of the government's stand, if at it all it happens, will be triggered by the stiff stand taken by RSS, the cultural wing of the ruling BJP, which is famously known for its cautious stand against FDI. Since the revenue loss on account of Vodofone and Shell cases are huge, some people in the know of things observe that RSS is firming up their stand against such concessions.
A few political watchers scotch this view arguing that for the next one year or so, there may not be any stiff resistance from the RSS on account of the promise that had given that they will not upset the government policies for at least for an year. Also, the present government is well set in power for the next five years and even if they have to cross with RSS on ideological ground, they can make up in the next five years, when the country again goes to  polls. 

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